electroCore, Inc. (NASDAQ:ECOR) Q4 2022 Earnings Call Transcript

electroCore, Inc. (NASDAQ:ECOR) Q4 2022 Earnings Call Transcript March 8, 2023

Operator: Hello, and welcome to the electroCore Fourth Quarter and Full Year 2022 Earnings Conference Call and Webcast . As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to Nicole Jones at CG Capital. Please go ahead, Nicole.

Nicole Jones: Thank you all for participating in today’s electroCore earnings call. Joining me today are Dan Goldberger, Chief Executive Officer; and Brian Posner, Chief Financial Officer. Earlier today, electroCore released results for the fourth quarter and full year ended December 31, 2022. A copy of the press release is available on the company’s website. Before we begin, I’d like to remind you that management will make statements during the call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements.

All forward-looking statements, including, without limitation, any guidance, outlook or future financial expectations, or operational activities and performance, are based upon the company’s current estimates and various assumptions. These assumptions involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list of the risks and uncertainties associated with the company’s business, please see the company’s filings with the Securities and Exchange Commission. electroCore disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.

This conference call contains time sensitive information that is accurate only as of the live broadcast today, March 8, 2023. With that, I will turn the call over to Dan.

Dan Goldberger: Thank you, Nicole. Hello everyone, and thank you for joining us on today’s call. We made great progress advancing non-invasive vagus nerve stimulation in 2022 for various uses. We reported record sales of $8.6 million for the year ended December 31, 2022, a 58% increase over the prior year and record fourth quarter 2022 sales of $2.6 million. Gross margins expanded nicely to 81% for the full year 2022. Revenue from the US commercial channel was $1.7 million for the full year ended December 31, 2022, a 158% increase from $679,000 in the full year 2021. $1.6 million of our US commercial revenue in 2022 came from cash pay programs as compared to $310,000 for 2021. We have several initiatives in the US Commercial Channel, which continue to grow in terms of revenue and number of prescribers.

Our cash pay clinician dispense programs, gCDirect and gConcierge have grown from 218 prescribers at the end of 2021 to 1,328 by the end of 2022. In the fourth quarter ended December 31, 2022, we added an additional 390 new prescribers and our prescriber numbers continue to show strong growth through the first few months of 2023. We believe the increase in prescribers could be a leading indicator of future growth. In December 2022, we announced the launch of Truvaga, our direct-to-consumer wellness product for stress, anxiety and sleep available online without a prescription at truvaga.com. We’re pleased with the early performance of Truvaga, which has generated sales of almost $100,000 in January and February, 2023. On future earnings calls, we’ll provide additional metrics around the Truvaga product line, but the soft launch so far has greatly exceeded our expectations.

During the year, we also announced a distribution agreement with Joerns Healthcare, LLC that we believe will add more than 12.5 million covered lives within its select managed care health system. The business model with Joerns will be similar to how we work with the VA hospital system. Joerns will handle adjudications, billing and collections, while electroCore will ship directly to patients and provide in-servicing and patient support. Joerns will pay electroCore for devices dispensed. We continue to work with Joerns on the implementation and our field sales team will be responsible for educating clinicians within those managed care systems. Net sales from the government channel, including Department of Veterans Affairs or the VA, the Department of Defense or DoD, and other government departments were $5.2 million, an increase of 60% as compared to $3.3 million in the full year 2022, a total of 117 VA and DoD military treatment facilities have purchased gammaCore products through December 31, 2022 as compared to 100 through the fourth quarter of 2021.

We anticipate continued growth in the number of facilities and penetration within those facilities through our customer experience team, territory business managers and sales agents in the field. On April 19, 2022, we announced that gammaCore non-invasive vagus nerve stimulation has been selected for additional funding by the Department of Defense Biotech Optimized for Operational Solutions and Tactics or the BOOST program. The BOOST Research Program, which will be conducted under the leadership of the 711th human performance optimization branch of the United States, Air Force, seeks to optimize and validate the efficacy of nVNS in accelerated training, sustained attention, reduced fatigue and improved mood among Air Force personnel. More recently, we’ve signed an agreement with the prime contractor and received our first purchase commitments under that contract.

We are establishing the TAC-STIM brand of nVNS for human performance to commercialize the product being developed under the BOOST program and we’re exploring ways to make our initial product offerings available to all branches of the active duty military and first responders in the United States and abroad. In 2022, TAC-STIM product sales contributed $125,000 of the government channel revenue reported above. Revenue from channels outside the United States increased 7% to $1.6 million in the full year 2022 as compared to $1.5 million for the full year 2021. In 2022, $139,000 was attributed to licensing fees associated with the exclusive relationship for nVNS in Japan. Now turning to our clinical progress. On September 7, 2022, the company announced the publication of a peer reviewed manuscript, Transcutaneous Cervical Vagus Nerve Stimulation reduces behavioral and physiological manifestations of withdrawal in patients with opioid use disorder in the Journal, Brain Stimulation, which was conducted with the support of Emory University and Georgia Tech University and sponsored by a grant from the National Institute on Drug Addiction.

We subsequently participated in a pre-submission meeting jointly with the FDA and IDA where we discussed the pivotal trial to support future regulatory submission for an indication to treat the symptoms of substance withdrawal. And IDA has indicated that they’re likely to finance that pivotal trial in its entirety. On October 20, 2022, we announced data from an oral presentation at Neurocritical Care Society’s 20th Annual Meeting held in San Antonio, Texas on the possible role of gammaCore in the acute treatment of traumatic brain injury or TBI. Additional work on the potential benefits of nVNS on TBI will be funded by an exploratory development research grant and R21 from the National Institute of Neurological Disorders and Stroke. We will continue to provide updates about our pipeline and other opportunities.

Now, I’ll turn the call over to Brian for a review of our financials and other guidance items. Brian?

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Brian Posner: Thank you, Dan, for the quarter ended December 31, 2022, electricCore reported net sales of $2.6 million, representing 72% growth compared to $1.5 million in the same period of 2021. For the full year 2022, the company reported net sales of $8.6 million, representing 58% growth as compared to net sales $5.5 million for the full year 2021. The increase of $3.1 million is due to an increase in net sales across all major channels, including the US Department of Veterans Affairs, US commercial channel and sales from outside the US. Gross profit for the fourth quarter of 2022 was $1.9 million as compared to $1.2 million for the fourth quarter of 2021. Gross margin for the fourth quarter of 2022 was 75% as compared to 80% in the fourth quarter of 2021.

Gross profit for the full year 2022 was $7 million compared to $4.1 million for the full year 2021. Gross margin for the full year 2022 was 81% as compared to 75% for the full year of 2021. The fourth quarter of 2022 included a charge of $217,000 to gross profit related to the change in estimate of the useful life assumption for certain of the company’s licensed products. Gross margin excluding the change in the estimated useful life charge would have been 84% for the quarter ended December 31, 2022. Total operating expenses in the fourth quarter of 2022 were $7.8 million as compared to $6.7 million in the fourth quarter of 2021. Total operating expenses for the full year 2022 were $29.9 million as compared to $24.1 million for the full year 2021.

Research and development expense in the fourth quarter of 2022 was $1.6 million as compared to $742,000 for the same period in 2021. R&D expense for the full year 2022 was $5.5 million as compared to $2.5 million for the full year 2021. This increase was primarily due to targeted investments to support the future iterations of our product platform, including the implementation of our intellectual property around the delivery of smartphone integrated and smartphone connected non-invasive therapies. Selling, general and administrative expense in the fourth quarter of 2022 was $6.2 million as compared to $5.9 million for the same period in 2021. SG&A expense for the full year 2022 was $24.3 million as compared to $21.6 million for the full year 2021.

This increase is primarily due to targeted investments to support our commercial efforts, particularly around sales and marketing efforts for our cash pay initiatives. Note that the $300,000 increase in Q4 2023 SG&A drove a corresponding $700,000 increase in revenue for the quarter, signaling accelerating leverage from our sales and marketing spend. GAAP net loss in the fourth quarter of 2022 was $5.8 million as compared to a GAAP net loss of $4.9 million in the fourth quarter of 2021. GAAP net loss for the full year 2022 was a loss $22.2 million as compared to a GAAP net loss of $17.2 million for the full year 2021. Again, the year-over-year increase was largely driven by our investment in new product development. Adjusted EBITDA net loss in the fourth quarter of 2022 was a loss of $4.7 million as compared to a loss of $4.4 million in the fourth quarter of 2021.

Adjusted EBITDA net loss for the full year 2022 was a loss of $19 million as compared to an adjusted EBITDA net loss of $15.8 million for the full year 2021. A reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in today’s press release. Net cash used in operating activities in the quarter ended December 31, 2022 was $4 million as compared to $4.4 million in the fourth quarter of 2021. Net cash used in operating activities for the full year 2022 was $16.6 million as compared to net cash used of $13.6 million reported in 2021. This increase is primarily due to the increase in our net loss from operations. Cash, cash equivalents and restricted cash at December 31, 2022 totaled $18 million as compared to $34.7 million as of December 31, 2021.

Looking ahead, for the full year 2023, we are guiding to $14 million to $15 million of net revenue. We believe that our legacy headache channels will grow again by more than 50% to at least $12 million for the full year and revenue from new products in the Truvaga and TAC-STIM brands could be more than $2 million for the full year. We expect net cash usage in the first quarter 2023 to increase as compared to the fourth quarter of 2022, largely due to seasonal factors affecting working capital, increased investment in product evolution. And now I’ll turn the call back over to Dan.

Dan Goldberger: Thank you, Brian. I’m super excited about our year-over-year operating results and the momentum we’re carrying into 2023, and I’m even more enthusiastic about the company’s long term prospects. Continued investments in our cash pay and covered business models have greatly expanded the nVNS therapy market as reflected by the revenue growth realized in 2022. We are also very enthusiastic about the initial results of our new wellness proposition, Truvaga. We believe our metrics are trending in the right direction and we’ll continue to evaluate our investments in all of our cash pay channels as the year progresses. The BOOST project being financed by the Air Force could accelerate the adoption of nVNS for human performance among our active-duty military.

Interest from different branches of the military continues to build for our TAC-STIM product, which may result in expanded adoption in future quarters. Orders within the VA DoD channel have been strong in January and February, which we believe may bode well for the first quarter. Similarly, Truvaga sales are outpacing our initial expectations, which could add a nice lift to our commercial revenue in 2023. Our cash pay initiatives are showing positive results. Our physician dispense programs are growing faster than expected as new prescribers make gammaCore available to patients directly through their practices or directly from electriCore. The Joerns announcement we discussed earlier is expected to dramatically increase the number of covered lives with access to insurance coverage for nVNS, and could generate material revenue later this year.

Further out, we continue working towards additional indications to treat post traumatic stress disorder and/or opioid use disorder, look for new product launches in 2024, featuring our app-enabled technology that can provide digital health solutions. That product platform will be launched in the headache, wellness and human performance as we ramp up our supply chain. I see many potential growth drivers in 2023 and beyond, including continued penetration of our VA DoD channel in the United States, growth in our US commercial channel, driven by cash pay business models, further development of the Truvaga product for wellness, anxiety and sleep, driven by an increased spend directed to consumer advertising efforts, further development of the TAC-STIM brand for human performance in the active duty military and beyond by leveraging the BOOST program financed by the Air Force and our app enabled new product platform that’ll facilitate consumer facing digital health solutions and unlock new business models.

We quietly instituted a reduction in first quarter of 2023 that’ll reduce operating expenses by about $700,000 for the remainder of 2023. While we are primarily focused on revenue growth, we’re constantly looking for ways to streamline our operations in the path to profitability. In closing, I would also like to point out that several directors of the company put common shares in the open market during the fourth quarter of 2022. In February, 2023, we implemented a one for 15 reverse split and regained compliance with NASDAQ listing requirements on March 6, 2023. At this time, I’ll turn the call over to the operator. Operator, please open the line for questions.

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Q&A Session

Operator: Our first question today is coming from Jeffrey Cohen from Ladenburg Thalmann.

Jeffrey Cohen: Thanks for the verbose read out. So a few questions from our own. I know you talked about the small OpEx reduction and talk about if that’s coming out of R&D or SG&A, and then maybe talk about tie that into R&D and all these programs. It’s wonderful you’ve got a lot of programs pushing forward and it sounds like there’s some grants and sponsorship out there. So should we anticipate a similar level of R&D for you but getting more for less, if you will, as far as programs?

Dan Goldberger: First of all, Jeff, I’m going to dodge the question about the rift. I don’t like to talk too much about people’s livelihoods. The various — the R&D spending is shifting from clinical work that was ongoing in 2019 and 2020 towards product development work for the new platform that we expect we’ll be able to launch in 2024. And that new platform is very exciting, it’ll lead to a family of app connected platforms, that in turn opens up the opportunity to get into some digital health in addition to our traditional vagus nerve stimulation and gives us quite a bit of freedom with business models. So look for quite a bit of innovation on the product side as we go into 2024. And as you know, the nature of product development is that it’s lumpy.

You end up with a large outlay upfront and then that engineering work tails off as you get towards product launch. As far as the indications go, post traumatic stress disorder is next up for us and then working with Dr. Bremner’s group on opioid use disorder financed by the National Institute of Drug Abuse would be following that, but those are probably both 2024 opportunities.

Jeffrey Cohen: Can you talk about the prescribers a bit? It sounds like you had a nice uptick toward the end of the year, and it sounds like it’s carrying through. Are you seeing any lumpiness there in the first quarter as far as deductibles and payers go, or would you expect that kind of the trajectory that you have gone upon recently is going to continue at that space?

Dan Goldberger: So for better or worse, most of our commercial business driven by those prescriber numbers is cash pay. And so while folks are using their HSA cards or their FSA cards, we are not really exposed to the deductible cycle on that cash pay portion of our business. We do have a small but hopefully growing cohort of insurance covered patients and those do indeed slowdown in the first quarter, but it’s very small compared to the cash pay component right now.

Jeffrey Cohen: And then lastly for Brian on the financial side. Any commentary on margins, it looks like 2022 overall was very strong and perhaps you got some headwinds from the labor environment or the supply chains out there. But for ’23 I think we were previously thinking high 70s, any reason given away there to think lower or higher on that front?

Brian Posner: No, we have been consistently in the 80s up until this quarter where we had that change an estimate. But as we said in our prepared remarks, we were over 80% without that charge. So we are fairly comfortable that we are going to still see north of 80% in 2023 as well.

Jeffrey Cohen: And do you expect the Truvaga major portion of that business or the direct to consumers to drive that lower or higher from previous levels?

Brian Posner: I think at this point, it won’t have a significant impact either way. So I’m very comfortable again with the overall percent or better gross margin going forward.

Operator: Your next question is coming from John Vandermosten from Zacks.

John Vandermosten: To start out with a question on your guidance, it looks like it brackets what we have over here at Zacks. And I was wondering if you could break down some of the areas where you think it’s coming from? I think you said earlier on the call that there is $2 million coming from Truvaga and the TAC-STIM program. But how do you see VA OUS and just some of the other more legacy, I guess, areas growing year-over-year in 2023?

Dan Goldberger: Our VA hospital business has two pieces to it. The first is going deeper into our existing customer accounts and the second is opening up new hospitals. And increasingly, we have been able to grow our field sales. I call them sales agents in the trade we call them 10.99 reps. These are folks who get paid straight commissions. So it’s all variable expense as we grow the business. The VA hospital business through the pandemic, right, we grew it 60% year-on-year from €˜21 to €˜22 and 60% the year before that. So I’m looking for at least 50%, 60% growth in that channel this year, as we continue to recruit 10.99 reps and go deeper into our existing accounts. The US commercial business, as I was just chatting with Jeff, is largely cash pay at this time.

Although, the announcement about Joerns giving us access to the Kaiser hospital system, once we get the bureaucracy worked out that’s another 12 million covered lives that could come on in the back half of the year, and that will be a very exciting upside to the numbers we’re talking about. But our cash pay business is driven by those prescriber numbers. And as we sign up a new prescriber that’s interested in offering nNVS therapy on a cash pay basis, that should have a multiplier effect going forward. So it’s been growing far more than that 50%, 60% and starting from smaller numbers. So I think that can grow very aggressively through the rest of this year. The new products TAC-STIM and Truvaga, very, very exciting starts. We already have some revenue from TAC-STIM, as we reported in the fourth quarter, fast start to our Truvaga launch.

And by the way everybody who’s listening, please go take a look at our new products at truvaga.com. But lots of reason for acceleration in all of our business channels as we go through the year, especially in the back half of the year.

John Vandermosten: And looking at the gross margin, I remember you had a lot of inventory that was helping keeping up that gross margin. Should we expect that to continue through 2023? And Brian, I know you had mentioned something to Jeff on that. Just wondering when that might run out and you have to start using newly manufactured inventory?

Brian Posner: Well, as Dan mentioned we have some new products coming out, scheduled for 2024. So we’ll have some out outlines for supply chain down the road. But right now we’re still very comfortable with our inventory levels for 2023.

John Vandermosten: So no new manufacturing is probably going to be required to satisfy anticipated demand in that $14 million to $15 million range you’ve

Brian Posner: No, we should be fine. The revenue should more than cover the cost of that, we should be fine.

John Vandermosten: And just the last one for me is on all the patents you have granted recently. And Dan, you’d also mentioned that we have some new products coming up. Can you associate some of those patents that have been announced? I think, there were at least five that maybe applicable to that to next year’s launch of new products?

Brian Posner: We have two broadly speaking, we have two families of patents. The first is around extending our non-invasive vagus nerve stimulation technology to other indications. And I’m using the term other indications broadly, because the work that the Air Force and now the Army is doing around human performance where they’re talking about cognition, where they’re talking about attention that is not what you would traditionally think of as a medical indication. And the second group of patents are around taking our product platform and moving it into the mobile phone app enabled digital health space. And so vagus nerve stimulation that communicates with an app, broadly speaking, is covered by this new family of patents.

Operator: Next question is coming from RK with H.C. Wainwright.

Ramakanth Swayampakula: It looks like you certainly had a good year and you’re looking to an even better year, especially with your guidance that you just provided. In terms of the confidence in your guidance going up quite a bit from where you are now. Can you just highlight some of the things that gives you that sort of confidence?

Dan Goldberger: Our largest revenue stream for the last two years and we expect in 2023 is our VA hospital business. The first half of €˜22 was impacted by COVID, and I’m very excited about sort of on the one hand that back to normal access that we will have for the full year 2023 multiplied by just the increased number of feet on the street we have, because we’re recruiting 10.99 reps. And so growing that business 60% in 2022 over 2021, we ought to be able to grow at least 50% and probably more like 60% or 70% in 2023 over 2022. Similarly, starting from smaller numbers, but our cash pay GC — gCDirect, gConcierge, we rattled off some of the prescriber numbers. Prescriber numbers are growing in the first couple of months of 2023.

So I think that that’s going to see accelerating momentum as we go through the year. The Joerns announcements and opening up access to the Kaiser system in the back half of the year, not even counting any of that. So lots of reasons why we should exceed that 50% growth in our base headache business and very few reasons why we’ll miss on it.

Ramakanth Swayampakula: So just to kind of dig a little bit deeper into some of those things which you just stated. In terms of the VA centers and also I’m more interested in the BOOST program. You stated that you have a contract in hand for the BOOST program. Is there anything more you can say other than just saying that you have a contract in the sense even if you can give us the numbers? How is this being set up, in the sense, is it going to be just a quarter at a time or the contract that you have that revenue would be spread over the full year?

Dan Goldberger: So the specific BOOST contract will be — we’ll have some revenue in the current quarter and in the second quarter. But over and above the BOOST contract, we have now been getting orders for deployment of small number of products. And we have about half a dozen quotations out there for deployment in certain units of Air Force Special Forces and Army Special Forces. We have not gotten anything from Navy Special Forces yet. So while the BOOST program was a specific R&D contract, we are now getting some small deployment orders and those will be recognized as product revenue when we ship and collect on them. And it could be significant in the second and third quarters of this year.

Ramakanth Swayampakula: And then on the commercial program, on the cash pay business, I know you are constantly adding more prescribers into that system. But just want to understand how that is working in relationship to the number of prescribers? Because you had this going for almost a year plus now. Is there some kind of correlation between the number of people you are adding in and getting scripts, or is this going to take a little bit longer until you have more prescribers test it, get their patients to test it? So I’m just trying to understand when would you get to your point where you feel comfortable with the increase in prescriptions in relationship to these prescribers?

Dan Goldberger: So that’s a great question and I have to slice it a few more ways. Historically, we have been a neurology company. Over the course of 2022, we have dramatically increased our call point. So roughly one third of our prescriber adds in 2022 come from traditional neurology or pain practices. But another third come from functional medicine, integrated medicine practices, which already have a cash pay model and clientele. And then the third-third of our prescriber base are chiropractors, which again already have a cash pay business model and clientele. So I’m very enthusiastic about the uptake. The traditional neurology, pain markets are slower to adopt, because their clientele generally have traditional insurance. But these other two segments have already embraced a cash pay business model in there and their demographic is already open minded in that direction.

Ramakanth Swayampakula: And then one last question from me, talking about Joerns Healthcare. I would imagine, there are multiple organizations in the country similar to Joerns Healthcare. So in terms of your growth strategy, are you waiting to see how Joerns executes before you start trying to look for other organizations, or these are all parallel conversations that are ongoing?

Dan Goldberger: No, you’re exactly right. We want to make sure that the Joerns launch goes smoothly in that DME business model. There is a lot of back office work to adjudicate the prescription, figure out what benefit plan that particular patient is on, collect co-pays or deductibles from that patient. So we want to make sure that channel is all working smoothly before we try to take it more national.

Operator: Our next question is coming from Anthony Vendetti from Maxim Group.

Unidentified Analyst: This is Thomas on the line for Anthony. I appreciate you taking the time to answer my questions, and I’ll just jump right into it. So firstly, could you guys provide a little bit more color? I know you guys spoke on it briefly on the call. But could you provide a little more color on the initial sales trends you’ve seen with the Truvaga product? And then just maybe a little bit looking forward, when do you expect to have a full commercial launch? And just kind of your strategy or how you’re looking at making sure you guys have enough in a way of sales and marketing team to meet demand. Is that going to be 10.99 reps or are you guys going to start to build out an internal team to meet the demand that you’re expecting with the Truvaga product?

Dan Goldberger : So truvaga.com went live in late December of last year, so January and February were the first — the two first full month of sales through that channel. And it is exclusively an e-commerce business model for a product that treats anxiety and sleep and stress in healthy people. It is not a medical device, it’s a wellness product and so does not need a prescription. And for 2023, we are going to stick primarily to that e-commerce model. We’ve been spending some money on Google Search. We’ve been building out various social media assets, surprising number of influencers have started to pick up the story. It turns out that vagus nurse simulation, vagus nerve therapy is somewhat topical in the wellness community right now. So we’re pretty excited about how that can grow as an e-commerce business model as opposed to a traditional med tech sales rep business model.

Unidentified Analyst: And do you have any insight on when you expect to do a full commercial launch with the Truvaga products?

Dan Goldberger: We’re not going to comment on that right now.

Unidentified Analyst: And then just kind of going back to the topic of e-commerce, I was just kind of curious to see where you guys were at. I know you guys were trying to launch or relaunch your e-commerce platform. And I know that a couple calls ago you spoke about, and you just mentioned that you were spending on Google, because the number of hits had gone down or just like the order in which you guys were listed had decreased. So I was just kind of wondering where you were at with that, has that gotten back to historical levels and then again, just where you’re at with relaunching the entirety of the platform?

Dan Goldberger: So in 2021, we launched with a telehealth partner for our prescription headache therapy and that was frankly disappointing for a variety of reasons. So we shut down that relationship, took a deep breath and chose instead to launch this completely new direct to consumer wellness product that does not require a prescription.

Unidentified Analyst: Those are all the questions I have for right now, and I appreciate you taking the time. I’ll jump back in the queue.

Operator: Next question is coming from Kemp Dolliver from Brookline Capital Markets.

Kemp Dolliver: First with regard to Kaiser. What level of efforts in terms of additional 10.99 reps do you think you’ll need to pursue that opportunity?

Dan Goldberger: So we’re going to be very systematic about it. We already have a small number of vocal clinical champions in the neurology department of Kaiser. The challenge has been the supply chain bureaucracy, for lack of a better term, and as you know Kaiser is a big animal. And once we demonstrate that we’re reliably getting prescriptions through the Kaiser bureaucracy then we’re going to be much more aggressive about scaling up the number of sales assets that we apply in California. So it is event based, not calendar based.

Kemp Dolliver: Well, you mentioned California, which is their largest footprint, but they do have some density in some other markets. So it sounds like you’ll focus on California initially and then go to the other markets or California exclusively?

Dan Goldberger: Exactly. No, we’re going to make sure that things work in California before we go to Colorado and Georgia and the other states where they do have a significant footprint.

Kemp Dolliver: Second question relates to NHS and the currency. So it’s in a way two questions, but sounds like NHS is still going to be, say, a stable contributor in 2023. And how are you — how does currency look for you at this point neutral, negative or any help?

Dan Goldberger: That’s a good question. My quick

Kemp Dolliver: Let’s assume steady state and go from there

Dan Goldberger: So currency, I’m not going to try to hedge on. But our NHS business is driven by the number of headache specialists that are authorized within the National Health Service. And the good news is we have got robust coverage through NHS. The bad news is that it is effectively rationed by the relatively small number of headache specialists and the waiting time in under that NHS system to get to see a headache specialist. So those logistics sort of keep a throttle on how quickly our business can grow. Our team in the United Kingdom is lobbying NHS to open up prescription to a larger cohort of neurologists, not just the headache specialists within the system. But that’s a Sisyphean, a Herculean task to get NHS to pay attention to us much less change their way of doing business. So we keep trying but it’s going to grow high single digits until or unless we can convince NHS to open up the number of prescribers that are available to us.

Operator: Thank you. We reached end of our question and answer session. I’d like to turn the floor back over to management for any further or closing comments.

Dan Goldberger: Yes. Thank you, everybody. We greatly appreciate you’re making time today. I want to give special thanks to all of our employees who have been working tirelessly to not only grow the headache business but launch two entirely new product lines. I encourage everybody please go take a look at our new consumer product offerings at truvaga.com. Of course, I also want to thank the healthcare professionals and their patients for their loyal support of our vagus nerve stimulation technology. Thanks, and have a good day.

Operator: Thank you. That does conclude today’s teleconference webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.